Nuclear winner and loser in US budget

15 February 2011

President Barack Obama has signalled continuing commitment to nuclear energy in a budget request for fiscal year 2012 that includes an increase in loan guarantees to help with nuclear new build and investments in nuclear R&D. But the proposals are less kind at the back end of the fuel cycle.

The presidential budget request traditionally submitted to the US Congress in early February reveals policy initiatives as well as setting out proposals on how the money is going to be found to fund them, although the final allocations will be decided after consideration and debate in the US Congress. Announcing the 2012 budget during a visit to a Baltimore school, Obama said the country needed to "out-build and out-innovate and out-educate, as well as out-hustle the rest of the world" in order to prosper, but also needed to reduce its deficits by "eliminating waste and cutting whatever spending we can do without."

The Department of Energy's (DoE) share of the budget request amounts to $29.5 billion, up from a current budget of $26.4 billion. Nuclear energy's portion of that, at $853 million, is $5 million down from the actual appropriation approved for fiscal 2010.

Key aspects in the nuclear budget include the authorization of an additional $36 billion in federal loan guarantees. Together with existing loan guarantee authorizations for some $18.5 billion, this would be enough to support six to eight nuclear power projects seeing the construction of nine to 13 new nuclear reactors, the DoE pointed out. The budget also includes support for nuclear energy R&D, including a $97 million request to support research into small modular nuclear reactors.

President Obama's ongoing commitment to enhanced nuclear security and non-proliferation is reflected in a request of nearly $65 billion over five years from fiscal 2012 for the US National Nuclear Security Administration (NNSA) and an investment of $2.5 billion in the NNSA's Defense Nuclear Nonproliferation program, which seeks to secure all vulnerable nuclear material around the world within four years.

The proposed US Nuclear Regulatory Commission (NRC) share of the 2012 budget, at $1.04 billion, is $28.7 million below the actual 2010 budget. The budget for operating reactors has been cut by $20.5 million, reflecting a reduced demand for licensing activities, but that for new reactors increases by $12.5 million in anticipation of the ongoing licensing activities for applications for combined construction and operation licences (COLs)and early site permits (ESPs), including one new ESP application anticipated in 2012. The regulator also says it expects four reactors to be under construction during the timescale of the budget.

However, finance for a high-level waste repository remains at zero, as the NRC anticipates that the "orderly closeout" of the Yucca Mountain waste repository review will be completed before the start of the fiscal year. There is a slight increase - $8.3 million - in the budget for materials and safety for non-high level waste due to increased used fuel and transportation activities.

US nuclear industry body the Nuclear Energy Institute (NEI) expressed concern at the lack of budget for Yucca Mountain, despite a pending licence application for the repository being before the NRC. In a statement on the budget, it pointed out that consumers will still have to pay a surcharge on bills for nuclear-generated electricity into the Nuclear Waste Fund.

Furthermore, the NEI points out, the budget indicates that the Obama administration intends to reinstate a tax on the decontamination and decommissioning (D&D) of uranium enrichment facilities. According to the NEI, the nuclear industry has already met its $2 billion-plus obligation to decommission DoE enrichment facilities as required under a 1992 statute, and the fund currently has a balance of $4.6 billion.

While welcoming the budget's proposals on loan guarantees and other nuclear energy support, NEI senior vice president for governmental affairs Alex Flint warned that the organization would continue to work to oppose the uranium enrichment D&D fund and the continued collection of levies for the Nuclear Waste Fund. "Budgetary and political pressures have led DoE to propose some activities that are patently unfair to the industry and its customers and that we vehemently oppose," he said.

Energy secretary Steven Chu emphasized that the budget included some "tough choices, cutting programs and expenses to underscore the Administration's commitment to fiscal responsibility and shared sacrifice." Both the US hydrogen technology program and Fossil Energy Office see budget reductions of over 40%, for example.

The contents of the presidential budget now pass to the US Congress and into a process involving the drawing up of budget resolutions, which can be amended by majority votes in the Senate and House, before being enforced in appropriations bills. Fiscal 2012 will begin on 1 October 2011.